pressing social challenges through dedicated entities (government enterprises). The above notwithstanding, social problems are still unabated and are on the increase, social entrepreneurs are developing innovative solutions to solve these social problem.
Just like the other two type of entrepreneurs mentioned above, social entrepreneurs will also need a platform to operate. This platform is a social enterprise. A non-profit oriented business platform that is socially inclined but must make profit for sustainability. This is what differentiates it‘s from charity organizations.
Social enterprises tend to operate with a purpose of creating value for the society and also generate income (if not wealth). As a thumb rule, the solutions they offer are supposed to be innovative, unique, cost effective, people and environment friendly.
All of these are challenges to the sustainability of social enterprises. The social entrepreneurs who are able to scale these hurdles are the ones that are able to create a huge and lasting impact. Since social enterprises typically deal with people who live at the bottom of the pyramid, they are advantageous to the society, the poor and the environment.
2.0 OBJECTIVE
At the end of this unit, you should be familiar with the concepts, goals and mission of a social enterprise, how to start a social enterprise, examples of some social enterprises around the world, organizations that support social entrepreneurs as well as the difference between a social enterprise and a conventional or traditional enterprise.
3.0 MAIN CONTENT
3.1 THE NATURE OF A SOCIAL ENTERPRISE
The term ‗social enterprise‘ is used to describe any organisation which uses business tools or approaches to achieve social goals/objectives. The precise criteria which an organisation has to meet to be classed as a ‗social enterprise‘ vary slightly from country to country. This makes defining social enterprise in a global sense quite a challenge. However, regardless of the precise criteria, all definitions of social enterprise incorporate the same fundamental principles.
For an organisation to be a ‗social enterprise‘ it has to trade using business tools, make the majority of its profit from the sale of products or services, not rely on funding or charitable donations, pursue social objectives and reinvest a decent percentage of its profits back into the organisation. Social enterprise ultimately refers to how an organisation is set up, how it generates profit, what is does with those profits and how it aims to promote its social objectives.
The structure of social entrepreneurial organisations is always flat and flexible – that is, with little bureaucracy. A small contingent of committed full-time staff is important in contributing towards a culture of innovation. Governance bodies tend to be small and sometimes lacking in accountability structures while management styles in most cases tend to be informal (Leadbeater, 1997). Relationships with users evolve as the social entrepreneur becomes aware of the complex needs and demands of the client.
Funding is often received from different organisations but a social business model must be developed for sustainability. In addition, co-operation with a complex set of partners or alliances is also critical if the social enterprise must survive.
3.2 DEFINING SOCIAL ENTERPRISE
A social enterprise is an organization operated within the social economy whose main objective is to create and sustain social impact rather than make profit for its owners or shareholders. Although, it is not primarily a profit oriented organization but it operates by providing goods and services for the market in an entrepreneurial and innovative manner to make profits and thereafter plough back the profit primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involves employees, consumers and stakeholders affected by its commercial activities.
In the light of the above, it will be considerably difficult to have a standard global definition of what constitute social entrepreneurship. However, Dees (1994) describes social enterprises as private organizations dedicated to solving social problems, serving the disadvantaged and providing socially important goods that were not, in their judgment, adequately provided by public agencies or private markets. These organizations have pursued goals that could not be measured simply by profit generation, market penetration, or voter support. While Haugh & Tracey (2004) posit that social enterprises are businesses that trade for a social purpose. They combine innovation, entrepreneurship and social purpose and seek to be financially sustainable by generating revenue from trading. Their social mission prioritizes social benefit above financial profit, and if and when a surplus is made, this is used to further the social aims of the beneficiary group or community, and not distributed to those with a controlling interest in the enterprise.
3.2 STARTING A SOCIAL ENTERPRISE
Starting a new venture isn't easy but it‘s worth the efforts at the long run. There are several tips that must be taken into consideration for an aspiring social entrepreneur who want to start a social; enterprise. They are as follows:
i. Articulate a problem and a solution
As an aspiring social entrepreneur, you need to convince people to trust you, to fund you, to invest their time, to leave better paying jobs to support your cause.
―You need to clearly articulate a problem and their possible solution. For example, there are approximately 2 million Internally Displaced people (IDP) in Nigeria, and a third of them are stuck in limbo: they can‘t return home, and they can‘t survive safely where they are. A firm like RefugePoint managed by a social entrepreneur (Chanoff), provides lasting solutions for the most vulnerable refugees around the world by permanently relocating them to a new country where they can rebuild safely, or, when possible, enabling them to integrate into their host country. The problem here is the permanent displacement and the solution is the relocation to a safer place where they can
rebuild. These have solved the problem of clarifying your objective. The goal of the would-be social enterprise is articulated, the social need that it will meet has been identified and how it will meet it has also been identified. It is important that the social entrepreneur is passionate about the goal and he/she must really believe in it.
ii. Find a balance – A would-be social entrepreneur should always keep in mind that the success of the social enterprise lays on a balance between its sustainable social change endeavours and sustainable business practices. What balance will make your organization most successful? This simply means that you must properly combine your social mission and entrepreneurial principles of profiteering.
iii. Research and Surround yourself with experts in your field
Research your field and learn from the people who have come before you and don‘t limit yourself in the scope of your research. See how other organizations and businesses, whether public or private, have used innovative methods. Try to learn from their mistakes. Make contacts and consider partnerships if it is appropriate.
For example, when Chanoff started RefugePoint, he went to the bigwigs in the humanitarian sector who were working with refugees to support his efforts. In addition, Chanoff recruited Julia Taft, who had also been director of USAID‘s Office of Foreign Disaster Assistance, to join his advisory board at its infancy.
He didn‘t have much money, but he did have the support of a world-leading official who believed in his mission, which helped generate more attention and funding. Hiring the right early-stage employees always pays off.
iv. Understand your market
As a rule of thumb, all social enterprises must develop a social business model – you must have a sustainable and profitable source of income. This means you must have a product offering in the market. As such, it is essential to have a good understanding of the market for your product or service if you hope to make an impact. Know who you will be serving and what they really need. Always make sure that what you are providing is something that the people you will be serving need. This must be blended well with the social mission of the enterprise.
v. Get Media Attention and Build networks
Feature your ideas in magazines (pitching story ideas) and other dailies, radio and television talk show etc. This sort of media attention from widely-distributed and respected media outlets is incredibly helpful for a social enterprise. It can signal to the public and potential investors that, even though you are a new player in the sector, you are both serious and effective.
Finding a person who believes in you dream may be an initial challenge if you don‘t have any existing network. But a single connection can open doors to other enthusiasts who will begin to fundraise for you and expand your network of donors.
vi. Be able to measure your impact
Be able to articulate to supporters, funders, and the public the impact of their solution to the course you are pursuing. Detail the cost, the number of lives impacted, and their accomplishments in a way that is accessible, and in this way, articulate a clear investment. This makes it easier to state clearly to investors, the cost to help one person. Having measurable and quantifiable indicators will help you attract more resources and grow your investment pool.
3.3 BENEFITS OF BUILDING SOCIAL ENTERPRISES
For today's consumers and businesses, social responsibility is a growing priority as concerns about climate change, international development, and supply chain ethics has become a more prominent topic of international discussion. Along this line as proven the survey conducted by Social Enterprise UK, it reveal that 1 in every 3 people said they feel ashamed about buying from a socially irresponsible businesses. Globally, over 90 percent of the consumer population expects companies to be socially responsibly – that is address social and environmental issues they may or may not have generated. This reflects a shift in consumer awareness about the impact of their purchase decisions. Not only are businesses being held to a higher standard, but many consumers are holding themselves to a higher standard as well.
Considering the aforesaid, a potential social entrepreneur will naturally enjoy the following benefits that help them succeed:
i. Social entrepreneurs find it easier to raise capital. There are huge incentives and schemes from the government for social entrepreneurs with ground breaking innovations. If the investment climate is ethical, it will be much easier to raise capital at a rate below the ruling market rates.
ii. Marketing and promotion for these organisations is also very easy. Since a social problem is being tackled with a solution, it is easier to attract attention of the people and media. The degree of publicity often depends on the degree of uniqueness of the solution. Naturally, publications and blogs love to cover social enterprises and their impact, helping them to evangelize their efforts and share their impact.
iii. It is easier to garner support from likeminded individuals since there is a social side to the enterprise. It is also easier to get people on-board at lower
salaries than compared to other industry.
iv. Cost effectiveness is another advantage of a social enterprise. The solutions offered by social enterprises (in the form of either products or services) are
cheaper when compared to the same service provided by a profit oriented enterprise. This can account for the reason why basic amenities such as healthcare, education etc have become very affordable to people at the bottom of the pyramid. Yunus micro finance, for example, caters for even the poor of the poorest
3.4 SOCIAL ENTERPRISES AROUND THE WORLD
There are several social enterprises springing up locally and internationally working on noble courses – delivering innovative and people friendly solutions to social challenges. These include but are not limited to:
i. Grameen Bank - Bangladesh
Social enterprise is not a new concept but it started becoming popular only in 1960s.
In modern history, the establishment of Grameen Bank in Bangladesh by Muhammad Yunus was the first instance where the concept was thoroughly used. The Grameen Bank is a microfinance organization that makes small loans to people living in rural areas without requiring collateral. The bank does not believe in charity but in offering help to people as an initiative to break through the poverty cycle.
ii. Omidyar Network - USA
Established in 2004, the Omidyar Network is a philanthrocapitalist investment firm that fosters economic advancement. With a network of for-profit companies, the network encourages participation in the areas of government transparency, microfinance, social media and property rights. Headquartered in Redwood City, California, it was established by Pierre Omidyar and his wife Pam.
iii. Echoing Green - USA
Based in New York, Echoing Green is a non-profit organization that operates in social sector investing. For last twenty years, it has been working in this field encouraging and helping young entrepreneurs to launch new organizations.
iv. Schwab Foundation for Social Entrepreneurship
Founded by Professor Klaus Schwab and his wife, the main purpose of Schwab Foundation for Social Entrepreneurship is to promote social innovation. The foundation does not give grants but addresses social problems and provides platforms at the country, global and regional levels.
v. Rang De - India
Rang De is a not for profit online organization in India that lends small loans to individuals planning to start a new or grow their existing business. It is a successful attempt to bring together the two parts of India one of which is successfully
progressing while the other is left out due to shortage of resources. Founded in the year 2006 by Ramakrishna NK and Smita Ram, Rang De, today is a major online platform in the country. It provides a platform where the rural and urban poor in India can access micro-credits with an interest rate of as low as 2 percent per annum.
Lenders from all across the country can directly lend money to borrowers, track investments and receive regular payments online.
vi. George Foundation
The George Foundation is one more nationally recognized social enterprise. The Women‘s Empowerment Program creates awareness among women by providing them education, vocational training, cooperative farming, business development and savings planning. By employing the principles of social entrepreneurship, these organizations are addressing the social problems and bringing a positive change in the society.
3.5 ORGANISATIONS ENCOURAGING SOCIAL ENTREPRENEURIAL ACTIVITY
The 20th and 21st Century witnessed the springing up of several foundations that aimed at providing support for social entrepreneurial organizations. They include:
i. Ashoka: Innovators for the Public
This is an international organisation, which has offices based in Johannesburg.
Ashoka is committed to ―pushing back the frontiers of poverty by identifying and supporting social entrepreneurs through financial and a host of value-added professional services‖ (Ashoka, undated). The organisation was founded in the USA in 1980 by Bill Drayton, and now has offices in thirty-three countries. He named Ashoka after a third century B.C. Indian Emperor who, after a particular conquest, renounced violence and dedicated his life to doing good deeds for the public.
Identifying the organisation as the first professional association for social entrepreneurs, Drayton sees the organisation as playing an important role in the defining of this new field (Bornstein, 1998). Through a rigorous selection process, Ashoka identifies people with new ideas, selecting the most capable individuals and providing them with a living stipend and relevant support structures to enable them to focus full-time on the implementation of their ideas. Typically, this lasts three years depending on Ashoka‘s confidence in the individual.
ii. The Schwab Foundation for Social Entrepreneurship
This foundation seeks to identify, recognise and disseminate initiatives in social entrepreneurship that have significantly improved people‘s lives and have the
potential to be adapted to other settings. This is a non-profit organisation based in Geneva, Switzerland, and aims to foster greater understanding of, and support for, the practice of social entrepreneurship through the creation of a network for social entrepreneurs (Schwab Foundation, 2002).
iii. Yale School of Management & Goldman Sachs Foundation Partnership on Non-profit Ventures
This partnership provides educational and financial support for non-profit enterprises, and focuses on social entrepreneurship in the non-profit sector. It was created in response to the growing number of non-profit organisations and their need to become financially sustainable. Thus the management school brings together teachings from the areas of entrepreneurship, social responsibility and business skills to enforce the philosophy that strong skills in the areas of business and management are critical in the success of leadership in all sectors of the economy. The partnership benefits from the mentoring skills of Goldman Sachs employees, consulting expertise from McKinsey, the Yale School‘s faculty staff and students in evaluating business ideas, providing technical assistance and assisting in research and case studies (Yale, 2003).
iv. Centre for the Advancement of Social Entrepreneurship, Fuqua School of Business, Duke University
This Centre was initiated in late 2001 in recognition of the talent, passion and dedication of many entrepreneurial leaders in the social sector. Given the current challenges in this sector, the Centre leaders believe that social sector leaders, students and faculty can benefit from a mutual learning process and discover means by which sustainable and innovative solutions may be developed in response to social needs.
They recognise the increasing opportunity for cross-sector learning and the increasing focus in the social sector on organisational effectiveness and demonstrated outcomes.
The Centre‘s mission is to promote entrepreneurial leadership in the social sector by supporting activities such as presenting courses on social entrepreneurship, enabling students to act as non-voting board members within local non-profit organisations, and providing funding for social sector related research (Anderson & Dees, 2002).
3.6 IMPACTS MADE BY SOCIAL ENTERPRISES AROUND THE WORLD
One of the most interesting and exciting aspects of social enterprise‘s evolution is the growing variety of issues being addressed by social enterprises. Today, social enterprises are disrupting markets across every industry and tackling social challenges throughout every corner of the world. A few representative examples include:
Grameen Bank - gave small loans to the poor for small business development.
From its inception in the 1970s, Grameen has provided $10 billion in loans to more than 10 million people and has proven the need and viability for financial
services to the poor. Grameen received the Nobel Peace Prize in 2006 as a reflection of its efforts and success.
Greyston - provides the homeless employment in a bakery that makes brownies for Ben & Jerry‘s ice cream. As Greyston (the founder) said, ―we don‘t hire people to bake brownies; we bake brownies to hire people.‖
D. Light - designs affordable solar-powered devices that provide an option to people that lack access to reliable energy sources. In its eight-year history, D.Light has sold more than 10 million solar lamps, improving the lives of 50 million people.
Dispensary of Hope - aggregates prescription medications that are nearing their expiration date and redistributes these drugs to free clinics in low-income communities. Clinics pay Dispensary of Hope a monthly subscription fee that covers basic expenses, and drug manufacturers save money by avoiding costs associated with destroying expired products.
TerraCycle - upcycles packaging and other non-recyclable consumer waste, keeping it out of landfills and turning it into new products. Today, Terracycle has established a recycling network of more than 31 million consumers and 100 major corporate brand partnerships, resulting in more than 3 billion units of garbage averted from landfills and transformed into new, 100% recycled products.
Benetech develops and uses technology to create positive social change. One of Benetech‘s signature programs is Bookshare, the largest literacy resource for people with disabilities. Before Bookshare, only 5% of printed materials were accessible to people with disabilities. Today, Bookshare‘s more than 330,000 subscribers have access to more than 300,000 titles in a variety of accessible formats.
Warby Parker sells fashionable eyewear to customers in developed markets, and makes a contribution to VisionSpring for each pair sold that enables access to affordable prescription glasses to people in developing countries who are otherwise functionally blind. So far, this partnership has distributed nearly 2.5 million pairs of glasses to those in need.
These are several; other social entrepreneurs/enterprises that are currently addressing one or more important social needs with an approach that has the potential to be efficient, effective and financially sustainable.
4.0 CONCLUSION
In this unit so far, you would have learnt what a social enterprise is, how to start a social enterprise, benefit associated with starting a social enterprise, examples of